Ghorpade & Suhas Vishnupant, v. Dy.CIT Cent.Cir.Kolhapur,

ITA 1138/PUN/2008 | 2006-2007
Pronouncement Date: 20-08-2010 | Result: Dismissed

Appeal Details

RSA Number 113824514 RSA 2008
Assessee PAN AJRPG4507Q
Bench Pune
Appeal Number ITA 1138/PUN/2008
Duration Of Justice 1 year(s) 11 month(s) 22 day(s)
Appellant Ghorpade & Suhas Vishnupant,
Respondent Dy.CIT Cent.Cir.Kolhapur,
Appeal Type Income Tax Appeal
Pronouncement Date 20-08-2010
Appeal Filed By Assessee
Order Result Dismissed
Bench Allotted B
Tribunal Order Date 20-08-2010
Assessment Year 2006-2007
Appeal Filed On 29-08-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV JM AND SHRI D. KARUNAKARA RAO AM I.T.A. NO. 1138/PN/2008 : A.Y. 2006-07 GHORPADE SUHAS VISHNUPANT 195 K-16 E WARD KAWALA NAKA KOLHAPUR 416 001 PAN AJRPG 4507 Q APPELLANT VS. DY. CIT CENT. CIR. KOLHAPUR RESPONDENT APPELLANT BY : SHRI C.H. NANIWADEKAR RESPONDENT BY: SMT. MANJU AJWANI ORDER PER SHAILENDRA KUMAR YADAV JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER OF THE CIT (A) KOLHAPUR DATED 24-3-2008 FOR A .Y. 2006- 07 AGAINST DISALLOWANCE OF DEDUCTION U/S 54F OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE WAS APPREHENDED BY THE OFFICERS OF THE INCOME-TAX DEPAR TMENT AT PUNE AIRPORT ON HIS ARRIVAL FROM CHENNAI. THE CASH OF RS. 28.86 LAKHS WAS SEIZED FROM HIM. THE ASSESSEE IN H IS STATEMENT U/S 132(4) SUBMITTED THAT THE MONEY REPRE SENTED THE PREMIUM OR ON-MONEY RECEIVED BY HIM ON THE SALE OF LAND BY HIM ON 5-10-2005. THE ASSESSEE WAS AN NRI HOLDI NG AN INDIAN PASSPORT. HE WAS A PERMANENT RESIDENT OF SI NGAPORE. ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 2 3. HE HAD PURCHASED SIX PLOTS A FEW YEARS BACK WHIC H WERE SOLD ON 5-10-2005. THE SALE CONSIDERATION WAS RECE IVED PARTLY BY A DEMAND DRAFT AND PARTLY IN CASH. THE CASH AMO UNT WAS CLAIMED TO BEING CARRIED BY HIM ON HIS WAY TO PUNE FROM CHENNAI. DURING THE ASSESSMENT PROCEEDINGS IN THEIR STATEMENTS U/S 131 THE PURCHASERS CATEGORICALLY DE NIED PAYING ANY AMOUNT OF CASH TO THE ASSESSEE. THE PAYM ENT WAS ONLY MADE BY WAY OF DEMAND DRAFT ACCORDING TO PURC HASER. THE ASSESSEE COULD NOT FURNISH ANY DOCUMENTARY EVID ENCE IN SUPPORT OF HIS CLAIM THAT CASH FOUND ON HIM WAS ON- MONEY RECEIVED ON SALE OF LAND. THE A.O THEREFORE HELD THAT THE AMOUNT OF CASH FOUND ON THE ASSESSEE COULD NOT BE P ROVED TO HAVE BEEN RECEIVED ON ACCOUNT OF SALE OF LAND. THE AMOUNT WAS ASSESSED TO TAX AS INCOME FROM OTHER SOURCES AND DEDUCTION U/S 54F OF THE ACT WAS DENIED ACCORDINGLY . 4. IN APPEAL THE CIT(A) OBSERVED THAT THE ASSESSEE IN HIS STATEMENT RECORDED U/S 132(4) DURING SEARCH PROCEED INGS EXPLAINED CLEARLY THAT THE CASH FOUND ON HIM WAS ON -MONEY RECEIVED ON SALE OF PLOT. THE A.O HAS REJECTED THE EXPLANATION FOR THE ONLY REASON THAT THE PURCHASERS OF THE PROP ERTY DENIED THE PAYMENT OF ON-MONEY OVER AD ABOVE THE AMOUNT PA ID BY DEMAND DRAFT. SUCH PAYMENTS ARE DENIED BY THE PURC HASERS. THE PAYMENT OF AN AMOUNT IS NOT DISCLOSED TO THE ST AMP DUTY AUTHORITIES THE REGISTRATION AUTHORITIES THE INCO ME-TAX ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 3 DEPARTMENT OR TO ANY GOVERNMENT AUTHORITY. THEREBY THERE WAS EVASION OF TAXES AND DUTIES IMPOSED BY THE STAT E WHICH HAS ITS OWN PENAL CONSEQUENCES AND PECUNIARY LOSS F OR WHICH PROPER AUTHORITIES ARE ENTITLED TO TAKE ACTION AS P ER LAW. ACCORDING TO THE CIT(A) THE CIRCUMSTANCES OF THE C ASE CORROBORATE THE STATEMENT OF THE ASSESSEE. THE ASS ESSEE HAS NO BUSINESS IN INDIA. HE IS A NRI HAVING A BUSINES S IN SINGAPORE. HIS ONLY INCOME IN INDIA IS INTEREST FRO M DEPOSITS IN NRE ACCOUNTS WHICH IS EXEMPT FROM TAX. FOR THIS RE ASON NO RETURN OF INCOME WAS FILED IN INDIA. THE RETURN FI LED FOR THE CURRENT ASSESSMENT YEAR IS ONLY ON ACCOUNT OF CAPIT AL GAINS. THERE IS NO EVIDENCE FROM THE STATEMENT RECORDED TH AT THE ASSESSEE HAD ANY OTHER SOURCE OF INCOME IN INDIA. THE ASSESSEE HAD FILED COPIES OF HIS INCOME TAX RETURNS FILED WITH THE INLAND REVENUE AUTHORITY OF SINGAPORE. THE COM PUTATION OF INCOME SHOWS THAT THE ENTIRE INCOME IS EARNED IN SINGAPORE. THE INCOME EARNED IN OTHER COUNTRIES IS SHOWN AT NI L IN THE RETURN FOR THE YEARS FROM 2006 TO 2008 FOR WHICH CO PIES OF RETURNS HAVE BEEN FILED. THE TOTAL INCOME REVEALED THEREIN IS AS UNDER : YEAR SINGAPORE($) OTHER COUNTRIES($) TOTAL 2006 44 400/- NIL 44 400 2007 60 000/- NIL 60 000/- 2008 75 000/- NIL 75 000/- 5. IN THIS BACKGROUND THE CIT(A) OBSERVED THAT THE ASSESSEE HAD SOLD LAND OWNED BY HIM A FEW DAYS BEFORE THE DA TE OF ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 4 SEARCH. HE ACCEPTED THE GENERAL PRACTICE OF ON-MONE Y PAYMENT IN PROPERTY TRANSACTIONS THE PURPOSE TO REDUCE THE LIABILITY FOR STAMP DUTY ETC. THE STATEMENT RECORDED DURING THE COURSE OF SEARCH DOES NOT ALLOW THE ASSESSEE TIME TO DELIBERA TE ON THE ISSUE OR SEEK LEGAL OR EXPERT ADVICE. THE CONFESSIO NS IN SUCH STATEMENTS ARE USUALLY HONEST. IN VIEW OF THIS TH E CIT(A) HELD THAT THE INCOME OF RS. 28.86 LAKHS FOUND IN CASH WI TH THE ASSESSEE WAS UNJUSTIFIABLY ASSESSED AS INCOME FROM OTHER SOURCES INSTEAD OF BEING ASSESSED UNDER THE HEAD C APITAL GAIN. ACCORDINGLY THIS PLEA OF THE ASSESSEE WAS ACCEPTED BY THE CIT(A). REVENUE IS NOT IN APPEAL AGAINST SAME. SO WE HAVE NO OCCASION TO ADJUDICATE THIS ISSUE. 6. REGARDING OTHER ISSUE OF DISALLOWANCE WITH REGAR DS TO DISALLOWANCE U/S 54F OF THE ACT CLAIMED BY THE ASSE SSEE THE CIT(A) OBSERVED THAT THE CLAIM OF THE ASSESSEE FOR EXEMPTION U/S 54F WAS MADE SINCE THE ASSESSEE HAD CONSTRUCTED A HOUSE IN KOLHAPUR. IN SUPPORT OF THE CLAIM THE ASS ESSEE HAD FILED A CERTIFICATE FROM THE ARCHITECT WITH REGARD TO INVESTMENT IN CONSTRUCTED HOUSE PROPERTY. THE ASSESSEE WAS AS KED TO FURNISH DETAILS OF INVESTMENT BANK STATEMENTS SHOW ING WITHDRAWALS FOR THE PURPOSE OF THE CONSTRUCTION AND OTHER DOCUMENTARY EVIDENCE WITH REGARD TO THE COST OF CON STRUCTION. IN THIS REGARD IT WAS SIMPLY SUBMITTED ON BEHALF O F THE ASSESSEE THAT THE ASSESSEE WAS IN SINGAPORE AND THE BILLS AND ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 5 VOUCHERS WERE LYING WITH HIM AT SINGAPORE. THE CON TRACTOR LEFT THE JOB AFTER THE CONSTRUCTION WORK WAS OVER. THE ONLY EVIDENCE WITH REGARD TO THE COST OF CONSTRUCTION WA S THE CERTIFICATE OF THE ARCHITECT. THE CERTIFICATE MENT IONS THAT THE HOUSE WAS CONSTRUCTED WITHIN THE TIME SPECIFIED U/S 54F. THE EXPLANATION HOWEVER WAS NOT FOUND SATISFACTORY BY THE A.O WHO FELT THAT THE INVESTMENT IN RESIDENTIAL HOUSE W AS SHOWN ONLY BY WAY OF WITHDRAWALS FROM BANK IN CASH. IT COULD NOT BE VERIFIED WHETHER THE AMOUNTS WERE SPENT FOR THE CONSTRUCTION OF THE HOUSE. ACCORDINGLY THE CLAIM FOR EXEMPTION U/S 54F WAS REJECTED. 7. IN APPEAL THE CIT(A) OBSERVED THAT AS PER THE P ROVISIONS OF SECTION 54F WHERE CAPITAL GAIN ARISES FROM THE T RANSFER OF A LONG TERM CAPITAL ASSET AND THE ASSESSEE HAS WITHIN ONE YEAR OR BEFORE TWO YEARS AFTER THE DATE ON WHICH TRANSFE R TOOK PLACE PURCHASES OR WITHIN 3 YEARS CONSTRUCTS A RESIDENTIA L HOUSE THE CAPITAL GAIN ON THE SALE OF THE LONG TERM CAPIT AL ASSET WOULD NOT BE TAXED TO THE EXTENT PROVIDED IN SECTIO N 54F(A)(B) OF THE ACT. IN ORDER TO CLAIM EXEMPTION THE ASSESS EE HAS TO: 1. PROVE THAT RESIDENTIAL HOUSE HAD BEEN CONSTRUCTE D WITHIN THE PRESCRIBED PERIOD; 2. THE COST OF CONSTRUCTION OF THE RESIDENTIAL HOU SE 3. THE HOUSE WAS CONSTRUCTED OUT OF THE PROCEEDS FR OM THE SALE OF THE LONG TERM CAPITAL ASSET ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 6 4. THE HOUSE WAS BUILT WITHIN THE PRESCRIBED PERIOD OF THREE YEARS. 8. THE ASSESSEE HAS FILED A CERTIFICATE OF THE ARCH ITECT REGARDING INVESTMENT IN PROPERTY. THE A.O DIRECTED THE ASSESSEE TO FURNISH EVIDENCE ON THE BASIS OF WHICH THE CERTIFICATE WAS GIVEN NAMELY BILLS OF MATERIALS U SED FOR CONSTRUCTION COPY OF THE BANK ACCOUNT SHOWING PAY MENT MADE FOR THE SAME. THE ASSESSEES STAND WAS THAT T HE BILLS AND VOUCHERS WERE WITH THE ASSESSEEE IN SINGAPORE A ND THUS COULD NOT BE PRODUCED. EVEN DURING THE APPELLATE PROCEEDINGS THE DETAILS SUCH AS BILLS OR MATERIALS HAVE NOT BEEN PRODUCED THOUGH SUFFICIENT TIME HAD PASSED. THE ASSESSEE COULD HAVE UTILIZED THIS TIME TO OBTAIN TH E BILLS AND VOUCHERS ETC. WHICH WERE SUPPOSED TO BE IN SINGAPOR E. MOREOVER THE WITHDRAWALS ARE IN CASH. THEREFORE THE ASSESSEE HAS NOT DISCHARGED HIS BURDEN THAT THESE WITHDRAWALS HAD BEEN MADE IN CONNECTION WITH PAYMEN TS FOR THE CONSTRUCTION OF THE RESIDENTIAL HOUSE. THE ARCH ITECTS CERTIFICATE MENTIONED THE COST OF CONSTRUCTION AS U NDER: YEAR AMOUNT 5 TH OCT 2004 TO 5 TH OCT 2005 28 00 000/- 6 TH OCT 2005 TO 31 ST MAR 2006 8 00 000/- 1 ST APRIL 2006 TO 25 TH MAY 2006 3 25 000/- 9. AFTER THE SALE THE INVESTMENT IS ONLY RS. 11 25 000/-. THE STAND OF THE ASSESSEE WAS THAT THE CONSTRUCTION OF HOUSE ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 7 COMMENCED ONE YEAR PRIOR TO THE SALE TRANSACTION AS PROVIDED IN SECTION 54F. ACCORDING TO THIS SECTION THE ASS ESSEE CAN PURCHASE A HOUSE EVEN ONE YEAR PRIOR TO THE SALE OF THE PROPERTY OR WITHIN TWO YEARS AFTER THE SALE. AS FA R AS CONSTRUCTION OF A HOUSE IS CONCERNED THE ASSESSEE IS ALLOWED EXEMPTION IF SUCH CONSTRUCTION IS COMPLETED WITHIN THREE YEARS OF THE SALE. THE EXEMPTION IS NOT AVAILABLE AGAINS T CONSTRUCTION PRIOR TO THE SALE. ACCORDINGLY THE C ONDITIONS FOR ALLOWING EXEMPTION HAVE NOT BEEN SATISFIED BY THE A SSESSEE. ACCORDINGLY CLAIM OF EXEMPTION U/S 54F WAS RIGHTLY REJECTED BY THE AUTHORITIES BELOW WHICH NEEDS NO INTERFERENC E WHATSOEVER. WE UPHOLD THE SAME. 10. IN THE RESULT THE APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 20 TH AUGUST 2010. SD/- SD/- (D. KARUNAKARA RAO) (SHAILENDRAKUMAR YADAV) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE DATED THE 20 TH AUGUST 2010 ANKAM COPY FORWARDED TO: (1) ASSESSEE (2) DEPARTMENT (3) CIT- KOLHAPUR (4) CIT(A) KOLHAPUR (5) THE D.R. B' BENCH PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITA NO. 1138/PN/08 GHORPADE S VISHNUPANT A.Y. 2006-07 8 INCOME-TAX APPELLATE TRIBUNAL PUNE BENCHES PUNE